The board of Trinidad Ce­ment (TCL) on Fri­day passed a res­o­lu­tion to raise a max­i­mum of $362 mil­lion in new cap­i­tal through a rights is­sue of 124,882,568 new shares at a price of $2.90 a share.The TCL share­hold­ers will be of­fered the right to pur­chase one new share for every two shares they hold.The $2.90 rights is­sue price is a 24.5 per cent pre­mi­um of TCL's share price as at the close of trad­ing on Fri­day.

The rights is­sue means that an in­di­vid­ual in­vestor who owned 10,000 TCL shares (which were worth $23,300 on Fri­day) would have the right to pur­chase 5,000 more shares at a price of $2.90 each, (in­vest­ing an ad­di­tion­al $14,500 in the ce­ment pro­duc­er). The in­vestor would then own 15,000 TCL shares, which would be worth $43,500 as the TCL share price is ex­pect­ed to in­crease to $2.90.

If all of TCL's share­hold­ers sub­scribe for the 124.88 mil­lion shares be­ing of­fered in the rights is­sue, the num­ber of shares in is­sue by com­pa­ny will in­crease by 50 per cent from 249,765,136 to 374,647,704.In a brief in­ter­view yes­ter­day, TCL chair­man Wil­fred Es­pinet said in es­tab­lish­ing the terms of the rights is­sue, the board took in­to con­sid­er­a­tion the share­hold­ers' sit­u­a­tion es­pe­cial­ly the fact that they have gone for eight years with­out a div­i­dend and have suf­fered a diminu­tion in the val­ue of their shares.

He not­ed the rights is­sue price is "sub­stan­tial­ly more than what the gu­rus had an­tic­i­pat­ed," an ap­par­ent ref­er­ence to com­ments made by TCL watch­ers, in­clud­ing the com­pa­ny's for­mer CEO Rollin Bertrand.In a let­ter pub­lished in the Guardian on Jan­u­ary 6, Bertrand pre­dict­ed that "the shares will be is­sued at $1.90 or US$0.30 per share," as "shares is­sued dur­ing a rights is­sue are nor­mal­ly of­fered at a dis­count." He al­so es­ti­mat­ed that the rights is­sue price would re­sult in a 66 per cent di­lu­tion.

And yes­ter­day, in a let­ter pub­lished in the Sun­day BG, Bertrand de­scribed the rights is­sue as "a bad deal for all share­hold­ers ex­cept Ce­mex," and as­sert­ing that "due to the high di­lu­tion it will per­ma­nent­ly con­demn TCL's shares to the base­ment and the price may go low­er than the IPO price of $0.75."

Mi­nor­i­ty share­hold­er ad­vo­cate Pe­ter Per­me­ll said the pub­li­ca­tion of the rights is­sue no­tice raised a num­ber of ques­tions, in­clud­ing: have TCL share­hold­ers res­i­dent in Ja­maica and Bar­ba­dos al­so been no­ti­fied of the rights is­sue; does the is­sue re­quire share­hold­er ap­proval and will the board be is­su­ing a di­rec­tors' cir­cu­lar.

One TCL in­di­vid­ual share­hold­er said the rights is­sue was be­ing priced to at­tract in­sti­tu­tions and not in­di­vid­u­als, but that there was a prob­a­bil­i­ty that the share price would go up to $2.90 in the short term.TCL is due to host a spe­cial share­hold­ers' meet­ing to­day to con­sid­er and vote on the re­moval of the 20 per cent cap on a sin­gle share­hold­er own­ing the com­pa­ny's shares.